Bile is the lipid-rich aqueous secretion of the liver that is necessary for the elimination of those aqueous solutes which are too hydrophobic to be excreted in urine, and for emulsification of dietary lipid in the upper intestine. The primary organic solutes in bile are bile salts and phospholipid, with lesser amounts of cholesterol and protein. Bile is the quantitative means by which the body disposes of excess cholesterol, both as bile salts and as free cholesterol. Hepatocellular secretion of phospholipid is critical for preventing bile salt damage to the downstream biliary tree, and for solubilizing secreted cholesterol. Alterations in phospholipid secretion may play a major role in the pathogenesis of cholesterol gallstone disease and cholestatic diseases. We employ in situ cryofixation of rat and mouse liver tissue to study the ultrastructure of the hepatocyte canavesiculation of the canalicular membrane is the principal means for hepatocellular secretion of biliary phospholipid under physiological conditions; (2) To determine whether remolding of phospholipid vesicles occurs within canalicular bile (potentially initiating cholesterol lithogenesis or aggravating cholestasis) ; and (3) To determine whether pathological conditions promote alternate mechanisms for phospholipid entry into bile, in particular via bilayer exocytosis or generalized disruption of canalicular membrane integrity. Our ultrastructural approach provides a unique opportunity to advance understanding of biliary phospholipid secretion, and will have immediate impact on efforts to understand mechanisms of cholesterol and biliary protein secretion. In so doing, insights may be gained into two key clinical problems: how bile secretory failure (cholestasis) develops; and how abnormal biliary lipid secretion may give rise to cholesterol gallstone formation.